Thursday, May 29, 2008

Holy Grail -- Watch Out!

Investors in stocks and commodities have an uncanny ability to always search for the holy grail, the magic bullet, the easy way to riches (or decisions). Lately even home buyers and real estate investors have been seen looking for one.

Only a few years ago (2001 for the expanded city list), Robert Shiller and Karl Case, economists at Yale and Wellesley, respectively, developed an index they call the Case-Shiller Home Price Index. This index computes home values for 20 major metropolitan areas around the country and conveniently boils it down to a single composite number like the price for a barrel of oil.

Shiller's and Case's purpose in this was to license the index exclusively to a firm, MacroMarkets LLC, founded by Shiller for "developing, structured and trading financial instruments" mentioned on the web site. Options and futures on the index are traded on the Chicago Merchantile Exchange (CME) to directly invest in and hedge U.S. housing.

As you may know, you can purchase options and futures contracts on virtually anything you can think of -- stocks, commodities, and yes, even indexes, like the S&P 500. There is no reason that an index on real estate prices should be left out.

The only problem is that some would-be home buyers and real estate investors are using this index (or a separate one for a metro area) as a decision tool to time the market. What's more, they even heed Shiller's forecasts calling for scary, 30% plus drops in housing prices which he told the Associated Press last month. Shiller doesn't know what prices will do and neither does anybody else.

There are a couple of flaws I see in the use of something like this to help someone make a decision. The first of which is that the index is calculated on a three-month moving average and released with a two month lag. This means that the May's report is releasing March's information. The second flaw is that using a broad-based index to make a decision for a particular community or neighborhood will likely produce an incorrect assessment and a wrong decision.

Remember the wider or broader you go in the information pool you use for real estate trend analysis, the greater the potential error you build in for a particular area under consideration. Now, I'm not an advocate of the "flying by the seat of my pants" style of analysis but am a proponent of highly-focused research into the market dynamics of the area of interest in as small an area as practical. I provide clients market intelligence information on trends, trend changes, supply and demand at the neighborhood level in order for them to make a better decision to either buy or sell.

Personally, I use indexes all the time and will even use the Case-Shiller when I want to trade the index. After all, its easy to get an indication of general stock price movements by what the Dow Jones Industrials or the NASDAQ averages did. But would you use that input to make a decision to buy or sell a particular stock? I hope not! Same goes for real estate. When I'm advising a client contemplating making a change, let's say, in Willow Glen, then I'll research Willow Glen, not use as the basis of my advice the Case-Shiller index for the entire San Francisco metropolitan area. I'm afraid it wouldn't be relevant and of much help!

In Sunnyvale, there are presently three distinct market areas and each of them pose an opportunity to understand so that the proper strategy can be applied. I wouldn't advise approaching the market in one area of Sunnyvale, for instance, with an indicator that is constructed of information related to markets in San Francisco, Oakland and Fremont.

Thanks for reading!

Monday, May 26, 2008

Real Eats -- Alexander's Steakhouse, Cupertino, CA

It's not often that after a meal, I take home about half of my dinner but it happened recently at Alexander's Steakhouse in Cupertino. Recently there for an anniversary celebration dinner with my wife of thirty years, we enjoyed ourselves immensely. Our older son was taken there last year for his birthday by his girlfriend and has raved about it ever since. So he said next special-occasion dinner you've got to try this place. In addition to just telling us, our two sons encouraged us by buying us gift cards to use.

My wife started by making reservations for our special night on On the website, they ask about any special comments or requests. My wife merely typed in a request that we get a nice table for our 30th Anniversary. Little did we know the comment would set in motion a whole host of things starting when we arrived. The hosts congratulated us on our anniversary (are we the only ones?) and seated us at a nice corner table away from the major aisles.

Next up, our servers, Jennifer and helper Andrew, presented us with two flutes which were immediately filled with a Spanish "champagne" or sparkling wine for a toast. Very classy! The wine was a little on the sweet side but woke up our palates nicely.

For a starter, we opted to split a Caesar salad and we're glad we did. The salad, made with full romaine lettuce leaves was excellently prepared with a slightly-tangy dressing was plenty for the both of us.

We were tipped off by our son that the dinner portions were quite large so we didn't order a bunch of starters though they had an impressive selection of small plates ranging from sashimi to lamb chop to foie gras to popcorn crab. The also offered a tasting menu as well as an Omakase and Iron Chef-inspired tasting menus from their executive chef, Jeffrey Stout.

My wife ordered their small filet mignon that came with shitake mushrooms, scallions and candied bacon. Cooked to perfection, she just loved it!

A lover of ribeye, I ordered their two-pound plus bone-in ribeye that was in a BBQ demi-glace and was served with some roasted tomatoes. The beef was just superior to others I've had and was so tender and full of flavor. To accompany the entree, I chose a glass of Cannonball Winery, 2005 Cabernet Sauvignon that paired well with the ribeye.

As dinners are al la cart, we ordered some sides to accompany our dinners. One, was a large baked potato which, as requested, had "goodies" served on the side so we could control the portions to our liking. We also ordered a side of asparagus which we found a bit disappointing. There weren't many spears and the rouille and saffron bread crumbs (served on the side as we requested) were tasty but still left us a bit disappointed in the overall dish. The best side was our third selection of crimini mushrooms. These were plentiful and were excellently-prepared in sherry wine with leeks. Outstanding taste and value!

I failed to mention that in-between the courses, they treated us to some very nice palate-cleansers. They included: tasty cracker topped with marscapone cheese and smoked salmon; and, disk of cucumber jelly topped with a raspberry.

Do to the quantity of food we ordered (and the wonderful, personalized cake I had at home) we opted not to order a dessert from Alexander's but our server, Jennifer, said we shouldn't run off. Shortly they arrived with a special platter with chocolate-scripted "Happy 30th Anniversary" on it that had a small brownie bite served with a couple of berries and whipped cream. What a surprise!

Now, it seems that our son was correct! A very impressive eatery with excellent, even personalized service and decor. Who could ask for anything more on our anniversary!

Alexander's Steakhouse
10330 N. Wolfe Road
Cupertino, CA 95014

Thanks for reading!

Saturday, May 24, 2008

Silicon Valley Community Calendar -- June

Here is an update to some of the events and on-going programs you might want to put on your calendar for June. These are selections from Sunnyvale, Cupertino, Mountain View, Santa Clara and other communities in Silicon Valley.

  • June 1, 8, 15, 22, 29: Fair Oaks Toastmasters, 11:30am, 408-251-2521
  • June 2: Sunnyvale Board of Library Trustees Meeting, 7:00pm
  • June 3, 10, 24: Sunnyvale City Council Meeting, 7:00pm
  • June 4, 11, 18, 25: Kiwanis Club of Silicon Valley, 7:20am, 408-774-0609
  • June 4: American Association of Retired Persons (AARP), monthly meeting, 1:30pm, 408-296-3805
  • June 4: Heritage Preservation Commission Meeting, 7:00pm
  • June 4, 11, 18, 25: Silicon Valley Toastmasters, 5:00pm, call 866-387-4086
  • June 5: SNAIL Neighborhood Association, monthly, 7:00pm
  • June 6: Heritage District Neighborhood Association, 7:30pm
  • June 7, 14, 21, 28: Sunnyvale Farmer's Market, 9:00am, 510-745-7100
  • June 7 & 8: Sunnyvale Art & Wine festival, 10:00am-6:00pm, Downtown Sunnyvale
  • June 8: Sunnyvale Art Club Exhibition, Noon-6:00pm, Sunnyvale Public Library, 408-730-7300 or visit
  • June 9: San Miguel Neighbors Association, general meeting, 7:00pm
  • June 9, 23: Sunnyvale Planning Commission Meeting, 8:00pm
  • June 10: NASA’s Phoenix/Messenger Update, 7:00pm, Sunnyvale Public Library
  • June 11: Sunnyvale Parks and Recreation Commission Meeting, 7:00pm
  • June 11: Lakewood Village Neighborhood Association, monthly, 7:00pm
  • June 12: Wake Up Sunnyvale!, Sunnyvale Chamber of Commerce Networking Breakfast, 7:29am, 408-736-4971
  • June 16: Sunnyvale Personnel Board Meeting, 5:00pm
  • June 18: Sunnyvale Arts Commission Meeting, 7:00pm
  • June 19: Sunnyvale Bicycle & Pedestrian Advisory Commission Meeting, 6:30pm
  • June 21: Compost Workshop, 10:00am
  • June 21: Household Hazardous Waste Drop-Off, 8:00am-1:00pm, Sunnyvale residents, 408-730-7262, TDD 408-730-7501
  • June 21: Loss, Trauma and Young Children, 9:00am-2:30pm, Free class but space is limited, call 408-523-8150 ext. 22 for locations and to register
  • June 25: Sunnyvale Housing and Human Services Commission Meeting, 7:00pm
  • June 25: Glaucoma Support Group of the South Bay, 6:30pm, 408-523-3221 or 408-404-8479
  • June 26: Sunnyvale Chamber of Commerce Business Mixer, 5:00pm, 408-736-4971

  • Mondays, Wednesdays, Fridays: Computer and E-Waste Recycling, 8:00am-4:30pm, Cupertino proof of residency
  • Every Wednesday: South Bay Community Orchestra, Noon-1:00pm for strings, 1:00-4:00pm for full orchestra
  • Every Saturday: Family Astronomy Evenings, De Anza College Planetarium, 6:00pm, 7:00pm or 8:00pm
  • Every Second Monday of Month: Fine Arts League of Cupertino, Quinlan Community Center, 7:00pm

NOTE: Remember the annual Sunnyvale Art & Wine festival on June 7 & 8 from 10:00am to 6:00pm. Last year it drew an estimated 150,000 attendees for the two-day event and is regarded as the largest of this kind of event in Northern California.

Thanks for reading!

Memorial Day 2008 Bay Area Events

The following events celebrate Memorial Day the right way around the Bay Area. All events are held on Monday, May 26th, 2008.

Gilroy’s Memorial Day – remembrance and parade, 9:00am, Eighth and Monterey streets, Gilroy.

Memorial Day at Madronia – 80th annual remembrance ceremony, 9:00am, Memorial Arch at Blaney Plaza, Oak Street near 6th Street, Saratoga. 408-867-3428

Santa Clara Mission Cemetery – Mausoleum steps service will include “Taps” played in honor of all vets, 10:00am, 490 Lincoln Street, Santa Clara. 408-296-4656

Mission City Memorial Park – Service honoring our fallen soldiers, 10:30am, 420 N. Winchester Blvd., Santa Clara. 408-615-3790

Santa Clara Veterans Memorial in Central Park – color guard, memorial services, rifle squad, “Taps”, 3:30pm, 969 Kiely Blvd., Santa Clara. 408-296-2512

Oak Hill Memorial Park – honors veterans of past wars, 11:00am, 300 Curtner Avenue, San Jose. 408-297-2447

American Legion Memorial Day Ceremony – speakers will speak on veterans’ sacrifices and history of Memorial Day, 10:00am, 1159 Bush Street, San Carlos. 650-595-9998

Memorial Day Service at the Presidio of San Francisco – Main post parade, program, cemetery walks and concert, 10:30am, Presidio of San Francisco. 415-561-5500 or visit

Memorial Day aboard the USS Pampanito – docked at Pier 45, Fisherman’s Wharf, 5:00pm, Taylor and Embarcadero streets, San Francisco. 415-775-1943

USS Hornet Museum Memorial Day Ceremony – honoring fallen soldiers with wreath throwing, presenting colors, 1:00pm, Pier 3, Alameda Point, Alameda. 510-521-8448

Veterans Memorial Day Service at Lone Tree Cemetery – Michael Emerson will speak on the Gettysburg Address, free food and drinks, 11:00am, 24591 Fairview Avenue, Hayward. 510-582-1274

Thanks for reading! Have a safe Memorial Day weekend.

Wednesday, May 14, 2008

May Silicon Valley Real Estate Market Update

This information summary and analysis uses MLS Listings Inc. (MLS) transactional data for April 2008. For single family homes in Santa Clara County, April saw a reduction of closings of 26% from April 2007. There were 653 closings in the month with 1124 initiated sales (accepted offers) that indicates that closings in May will likely continue higher. This drop from last year occurred across the board in each of the counties I track closely: Santa Clara, San Mateo, Santa Cruz and Monterey. Both San Mateo and Santa Clara counties registered more sales than in March, in keeping with the normal seasonal uptrend towards Memorial Day. Santa Cruz and Monterey counties did increase from last month but only slightly. Closings in San Mateo County were 346 only an 11% decline from April 2007.

Inventory of available single family homes was 5,540, up from 5,303 last month and up from 3,378 in April 2007. This places Santa Clara County at an all-time high. San Mateo county is also at an all-time high of 1,717, up from 1,141 the same month a year ago. Both Santa Cruz and Monterey are near their all-time highs.

Days of Unsold Inventory (DUI) or the intersection of the inventory (supply) with the recent sales level (demand), shows Santa Clara County at 148, down from 173 last month but up sharply from 78 in April 2007. San Mateo County is at 122, up from 105 last month. Santa Cruz County has a DUI reading of 168, down sharply from 209 last month. Monterey County showed DUI at 197, also a sharp drop from 260 last month. Please remember that a lower figure is good here. Clearly, even with the drops in this indicator, these still are indicating a buyer's market condition as a reading of DUI of 90 or above depicts. For comparison, a seller's market will have a DUI of less than 45 and a balanced market will have a DUI between the two. Keep in mind that these are county-wide averages. The wider area you measure, the statistics are less reliable as a decision tool and also that there is often an incredible variation between those areas experiencing terrible market conditions compared to those at virtually the other extreme. As I've mentioned, real estate is local (down to the neighborhood level in some cases) and market conditions can vary within each county and even within cities by a large amount. For instance, within Santa Clara County, Los Altos and Palo Alto have the best market climates in the county with a DUI reading of 59, down from 60 last month, while Morgan Hill, San Martin and Gilroy have the worst reading of 245. The following is a ranking of selected Santa Clara County cities or areas with their current DUI readings and last month's calculation in parentheses. Even though there are a lot of "improving" notations made, these areas are still in what we call a "buyer's market" and have poor market climates. Just some markets are much better off than others.

  • Los Altos, Mountain View, Palo Alto - 59 (last month - 60) - improving
  • Cupertino - 54 (62) - improving
  • Almaden Valley - 90 (85) - worse
  • Sunnyvale - 75 (86) - improving
  • Cambrian - 136 (88) - worse
  • Campbell - 128 (94) - worse
  • Saratoga - 145 (96) - worse
  • Blossom Valley - 107 (125) - improving
  • Santa Clara - 109 (120) - improving
  • Milpitas - 120 (138) - improving
  • Willow Glen - 148 (151) - improving
  • North Valley - 104 (152) - improving
  • Evergreen - 138 (152) - improving
  • Downtown SJ - 176 (178) - improving
  • Los Gatos - 120 (185) - improving
  • Santa Teresa - 96 (210) - improving
  • East Valley - 180 (236) - improving
  • South SJ - 169 (250) - improving
  • Gilroy, Morgan Hill, San Martin - 245 (298) - improving
  • Los Gatos Mountains - 223 (356) - improving

The median price for single family homes in Santa Clara County was $768,000 down from $868,406 the same month a year ago which was our record high month and down from $799,000 in December. This is a decline of 11.6% from that record high. There is still an emphasis (overweighted percentage) of higher-priced homes sold as opposed to the more affordable homes but not as pronounced as last year when the sub-prime loan problems started in February 2007. The bottom 10% median selling price was $461,000 in April and showed a decline of 28.6% from the same month a year ago and the top 10% median price was $1,736,000 a drop of only 5.7% from April 2007. The northwest quadrant of the county including Palo Alto, Mountain View, Los Altos, Cupertino and parts of Sunnyvale (zip 94087) are at or near their all time highs while county-wide medians are down. Median prices for single family homes by county in April 2008 were:

  • Santa Clara County - $768,000 (April 2007 was $868,405 or a decline of 11.6%)
  • San Mateo County - $875,000 (April 2007 $976,000 or a decrease of 10.3%)
  • Santa Cruz County - $683,500 (now below their April 2005 median price of $715,000)
  • Monterey County - $405,000 (record high $799,500 set in August 2007 or a decrease of 49.3%)

The price range with the lowest DUI is called the "sweet-spot" of the market. For April it remains the $1,000,000 to $2,500,000 range. Next comes the $750,000 to $1,000,000 range and then the under $600,000 range. For condo/townhouses the picture is similar but slightly better with a DUI reading of 165, down from 177 last month. Potential real estate investment buyers take heart as the DUI picture has continued to post poor numbers and stands at 447, even though it did improve from last month. This means under the current rate of sales of multi-unit properties, there are about 1.22 years of unsold supply! The "sweet-spot" of the multi-unit or investor class is also the range $1,000,000 to $2,500,000. Lenders have substantially increased the borrower's minimum requirements to obtain a loan for investor property purchases AND many are not allowing the use of home equity credit lines for their down payments so I forecast that this area will remain weak. This remains an area of opportunity for smart, long term investors with adequate down payments. Rental rates continue to increase and are estimated to increase 10-12% in 2008.

Why is following all these trends and statistics worth it? I believe that informed clients make the best decisions. The research and staying on top of the changes to market conditions allows me to properly advise my clients on the appropriate strategy to employ so that they make the best decision possible. This is one area I part company from other real estate agents as only a relative handful of agents invest the time to study the trends. Most other agents spend the bulk of their time working on self-promotion ads for newspapers, magazines and stuff that fill your mailbox with either "brag" cards or "spray and pray" cards. Beware the various media sound-bites or headlines as they generalize too much (i.e., the national real estate market, the Bay Area real estate market, etc.). If you generalize too much you lose the fineness of being able to use current information strategically to make better decisions.

If you have any comments or questions, please feel free to post them here or send me an email at

Thanks for reading!

Tuesday, May 6, 2008

Not All Bad News!

On the front page of the Business + Technology section for May 6, 2008, San Jose Mercury News real estate reporter, Sue McAllister, published an article "More Bad News!". The gist of the article was that, according to Zillow, San Jose area home prices fell about 8% from a year ago. What's more, half of the 2006 home buyers owe more than their homes are worth.

In the article was a chart from Zillow that portrayed each Santa Clara County zip code and the range of their median price change from the first quarter of 2007. Now the chart was colorful to be sure but the differences to me were striking. Here are my thoughts on the article/released data:

  • To be sure, some zip codes, most notably in the north part of Sunnyvale, East portion of San Jose and Gilroy are experiencing a major downward movement in prices and are listed in the "down 13-19%" category.
  • Some zip codes are moving the other way! These are located in Palo Alto, Mountain View, Los Altos, Sunnyvale, Cupertino, Saratoga and a portion of Los Gatos. These are categorized as "up 1-10%" from a year ago.
  • There are several zip codes that weren't listed in any price change category due to no data. Most notably these are located in Palo Alto where the market has been hot. Who knows, perhaps Zillow didn't want to release that zip codes 94301, 94304 and 94305 increased more than 10%. I found it quite interesting, though, that an active market area in the above zip codes had "no data recorded".
  • To me, there is an issue with one-size-fits-all headlines as they most often paint a picture with too broad of brush. Obviously, a homeowner who lives in in one of the zip codes experiencing an increase over last year would be scratching their head.
To the best of my chart interpretation, I've listed each zip code and the corresponding median price change category. For more information, please visit or view the full report at

Santa Clara County Zip Codes

Zip Code
Median Price Change
Up 1-10%
Up 1-10%
Up 1-10%
Down 3-7%
Down 13-19%
Down 7-13%
Up 1-10%
Down 13-19%
Up 1-10%
Down 7-13%
Up 1-10%
Up 1-10%
Down 1-3%
Down 7-13%
Down 7-13%
Down 13-19%
Down 7-13%
Down 3-7%
Down 7-13%
Up 1-10%
Down 7-13%
Down 13-19%
Down 7-13%
Down 7-13%
Down 13-19%
Down 3-7%
Down 7-13%
Down 7-13%
Down 3-7%
Down 13-19%
Down 13-19%
Down 13-19%
Down 3-7%
Down 3-7%
Down 7-13%
Down 13-19%
Down 3-7%
Up 1-10%
Down 1-3%
Down 7-13%
Down 7-13%
Down 7-13%
Down 7-13%
Down 7-13%
Down 7-13%
Down 3-7%
Down 7-13%
Down 7-13%

ND = no data

In researching the current market value for either buyers or sellers, I proceed to review all recent sales as well as those homes that have sold but not closed escrow (sale pending). Current list prices are not as relevant due to the fact that some sellers have "sticky" prices that are obviously too high for their particular market. The outcome of my research is what I call the home's "relevant range" or the value most likely to produce a transaction in a reasonable length of time. By the way, my research to obtain the relevant range is normally done on a finer level and even at a neighborhood level as entire zip codes could mask what is occurring in a particular part of a zip code.

If you have any questions or feedback, please leave me a comment or send me an email. Thanks for reading!

Sunday, May 4, 2008

Spring Cleaning? Include the Prevention of ID Theft

Since tax season is done, I usually clean up files that have been accumulating this past year to make room it seems for more paper! To get a fix on what I needed to keep, I turned to the Better Business Bureau (BBB) for advice.

In the careful handling of personal paperwork, I invested in a crosscut shredder for small to medium sized jobs. It also has a handy slot to thoroughly cut up credit cards. I've learned that you can't do all the shredding at once as you'll burn the motor! If you've procrastinated a long while and have a larger job, please give me a call or send me an email and I'll refer you to a reputable area firm that will either shred at your place of business or home.

Here is an article from the BBB publication "The Connection" that contains handy tips for all sorts of different items...

Spring-Cleaning? Prevent ID Theft by Following BBB Advice on What to Keep and What to Shred

Spring is here and now is a good time to rid the house of paperwork that has accumulated over the past year. Better Business Bureau (BBB) warns that, when it comes to reviewing and cleaning out financial records, failing to shred sensitive documents can put everyone at risk of ID theft.

Last year alone 8.1 million Americans became victims of ID theft resulting in the loss of $45 billion according to a 2008 report from Javelin Strategy and Research. The report notes that, contrary to popular belief, only 12 percent of ID theft is perpetrated online. The vast majority of ID theft occurs when the thief has direct contact with the victim’s personal information such as through a stolen or lost wallet, or by rifling through the victim’s mailbox or trash.

“When people think of ID theft they almost immediately focus on hackers and online security,” said Sharon D'Amico, BBB president. “But the truth is most ID theft happens when people have failed to secure or properly destroy important financial information including paper documents, IDs, and credit cards.”

Properly destroying sensitive personal and financial documents is a key step in ID theft prevention and BBB offers the following guide on when to shred the following documents:

Canceled checks

Canceled checks with no long-term significance for tax or other purposes can be destroyed after one year. However, canceled checks that support tax returns, such as charitable contributions or tax payments, should be held for at least seven years – long enough to cover the six-year tax assessment period. BBB advises that consumers indefinitely keep any canceled checks and related receipts or documents for a home purchase or sale, renovations or other improvements to owned property, and non-deductible contributions to an Individual Retirement Account.

Deposit, ATM, credit card and debit card receipts

Consumers should save credit, debit, and ATM receipts until the transaction appears on their statement and they have verified that the information is accurate.

Credit card and bank account statements

Credit card and bank account statements with no tax or other long-term significance can be discarded after a year; remaining statements should be kept for up to seven years. If a consumer receives a detailed annual statement, they should keep it and shred the corresponding monthly statements.

Credit card contracts and other loan agreements

Credit card contracts and loan agreements should be kept for as long as the account is active in case the consumer has a dispute with their lender over the terms of the contract.

Documentation of a purchase or sale of stocks, bonds and other investments

Investors should retain documentation of a purchase or sale for as long as they own the investment and then seven years beyond that time. Monthly retirement and monthly investment account statements can be shredded annually after being reconciled with the year-end statement.

Paycheck Stubs

Paycheck stubs can be shredded yearly after the income has been reconciled with a W-2 or other tax forms.

Utility or monthly bills

Monthly bills should be shredded the year after being received by the consumer. This way, if it’s a power bill, for example, consumers can compare this month’s bill to last year’s bill for any major changes before shredding it.

Shred-it Checklist - Don’t just toss it, shred it!

  • Documents that include Social Security numbers, birthdates, PIN numbers or passwords
  • Banking documents and other financial information
  • Leases, contracts or letters that include signatures
  • Pre-approved credit card applications
  • Medical or dental bills
  • Travel itineraries
  • Used airline tickets

For more trustworthy advice from BBB on preventing ID theft and for guidance on what to do if your identity is stolen, go to

As a Realtor with a Seniors Real Estate Specialist designation (SRES), I am especially sensitive to seniors but understand that virtually anyone can become a victim of identity theft. The above contents were used with permission of the Better Business Bureau at 408-278-7400. Tom McEvoy, Realtor is an Accredited Business (member) of the Better Business Bureau.

Thanks for reading!